City schools end year with surplus

Cost reductions, fiscal controls mean $4.9 million left over

`We were very decisive'

Officials hope cuts impress legislators, help with future aid

October 10, 2001|By Erika Niedowski | Erika Niedowski,SUN STAFF

Baltimore school officials reported yesterday that the last fiscal year -- which began on precarious financial ground -- ended with a modest surplus, and cited the results as proof that the system is on the road to financial health.

Thanks to cost-cutting measures and tighter control over spending, the school system posted a $4.9 million surplus in the year ending June 30, Mark Smolarz, the system's chief operating officer, told the city school board last night.

School officials hope the news will impress state legislators, who in January will take up the issue of future aid.

"It's an enormous boost to our credibility in effective management of our resources," board Vice Chairman C. William Struever said of the unaudited figures. "I'm delighted with the progress that we've made."

The nearly $5 million surplus has been used to pay down a $19.1 million deficit carried over from the previous year.

Officially, the remaining deficit was reported as $15.2 million. But Smolarz said a federally mandated accounting method that went into effect this year prevented the school system from counting more than $9 million in money it is due, which would leave the deficit at $6.1 million.

The school system was on track last fiscal year to overspend its budget by $16.8 million. But officials took steps to roll back spending, including laying off workers, freezing positions, reducing overtime and limiting travel.

Schools Chief Executive Officer Carmen V. Russo, who missed last night's meeting to attend an education summit in New York, said this week that the system is "light-years" ahead of where it was financially when she took over 15 months ago.

"I think it's much healthier because I think that we were very decisive in taking steps to correct some of the problems that we inherited," she said.

Shortly before Russo replaced Robert Booker as head of the 96,000-student system, it was revealed that two high-ranking administrators had awarded lucrative no-bid contracts worth millions of dollars. The chief financial officer and business officer resigned over the issue, and the school board tightened financial controls that members acknowledged had been lacking.

There was "no way," Russo said, that the $19 million deficit could be eliminated in one year without affecting classrooms -- which she vowed not to do. She said she hopes to eliminate it within one to two years.

Russo said she expects the governor and General Assembly -- which entered into a landmark partnership with the city system in 1997 that was marked by more than $250 million in new state aid -- to look favorably on the progress her administration has made.

Some lawmakers have been critical of the system for not being more prudent about its finances.

"I think that they're going to feel that we've been very responsible," Russo said. "I think that we have clearly lived up to the commitment that we made as a school system" to balance the budget.

The system had a $34.6 million operating deficit in fiscal year 2000. But because it had a $15.5 million fund balance, the deficit carried over was reduced to $19.1 million. More than $15 million of that was money school officials said they were owed by the city. That matter was settled this year when the city paid the school system $8.1 million.